In the last few weeks you have probably seen headlines like this one above. But what exactly Bitcoin halving is?
Let’s start with a dictionary definition. According to the Cambridge Dictionary: „halve” – to divide something into two equal parts. Easy.
In three days there will be the second in the history of Bitcoin decline in awards for the block. This is due to the way of the distribution of Bitcoins. At first prize for the block was 50 BTC, now 25 BTC and after halving, it will fall to 12.5 BTC.
What does it mean for Bitcoin course?
Currently, every day 3600 new bitcoins are generated. Every new mined bitcoin automatically reduces the value of ones which are already in the circuit. It’s similar to the flat money. If you print more dollars, you will reduce the value of it. However, in Bitcoin it’s a way for fair distribution. New bitcoins are in the hands of miners, which confirmed all transaction in the Bitcoin network. This inflation decreases gradually and it’s all written in algorithm, which will transform it into deflation.
After a decline of prizes, inflation and supply will fall by half, assuming that the popularity of Bitcoin does not reduce, it must contribute to growth of the Bitcoin course in long – term.